Indian-Origin former Equifax software engineering manager charged for illegal trading

Mr Bonthu was an Equifax employee from September 2003 until March 2018.

NEW YORK(TIP): An Indian-origin software engineering manager has been charged by the Securities and Exchange Commission that he traded on confidential information he received while creating a website for consumers impacted by a data breach.

Sudhakar Reddy Bonthu, 44, is a permanent resident of the US State of Georgia. Mr Bonthu was an Equifax employee from September 2003 until March 2018.

The Securities and Exchange Commission (SEC) said Mr Bonthu committed securities fraud by engaging in illegal insider trading in the securities of information solutions and human resources company Equifax.

The Securities and Exchange Commission charged him with insider trading in advance of the company’s September 2017 announcement of a massive data breach that exposed Social Security numbers and other personal information of approximately 148 million US customers.

This is the second case the Securities and Exchange Commission has filed arising from the Equifax data breach.

In March, Securities and Exchange Commission had charged former chief information officer of a US business unit of Equifax Jun Ying with insider trading.

Beginning in September 2013, Mr Bonthu was a Production Development Manager of Software Engineering in Equifax’s Global Consumer Solutions business unit. On March 12, 2018, his employment was terminated by Equifax and is currently unemployed.

In a complaint filed in federal court in Atlanta on June 28, the Securities and Exchange Commission charged that Mr Bonthu traded on confidential information he received while creating a website for consumers impacted by a data breach.

According to the complaint, Mr Bonthu was told the work was being done for an unnamed potential client, but based on information he received, he concluded that Equifax itself was the victim of the breach.

The Securities and Exchange Commission alleges that Bonthu violated company policy when he traded on the non-public information by purchasing Equifax put options.

Less than a week later, after Equifax publicly announced the data breach and its stock declined nearly 14 per cent, Mr Bonthu sold the put options and netted more than $75,000, a return of more than 3,500 per cent on his initial investment.

Mr Bonthu was terminated from Equifax in March after refusing to cooperate with an internal investigation into whether he had violated the company’s insider trading policy.

“As we allege, (Sudhakar) Bonthu, who was entrusted with confidential information by his employer, misused that information to conclude that his company had suffered a massive data breach and then sought to illegally profit,” said Richard R Best, Director of the SEC’s Atlanta Regional Office.

“Corporate insiders simply cannot abuse their access to sensitive information and illegally enrich themselves,” Mr Best said.

In a parallel proceeding, the US Attorney’s Office for the Northern District of Georgia filed criminal charges against Mr Bonthu.

To settle the Securities and Exchange Commission’s civil charges, Bonthu has agreed to a permanent injunction and to return his allegedly ill-gotten gains plus interest. This settlement is subject to court approval.

 

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